1. The assessee is in appeal arising out of the order of CIT(A) XXI, Mumbai dated 5-1-2000. The assessment year under consideration is assessment year 1996-97. As per grounds of appeal number of grounds have been raised which revolve around a major issue whether the capital gain is chargeable for the year under consideration. Whether revenue authorities were right to hold that "transfer" took place as per the provisions of Section 2(47) of Income-tax Act during the year under consideration It is also challenged that since the possession of the property was handed over during the assessment year 1999-2000, therefore, the transfer took place in that very assessment year.
2. The return of income was filed declaring total income of Rs. 15,63,690, however, the assessment was completed under Section, 143(3) vide order dated 26-3-1999 for the assessment year 1996-97 on the assessed income of Rs. 75,02,780. The main addition was in respect of long term capital gain on sale of Gamdevi Property of Rs. 61,32,651.
According to Assessing Officer vide agreement dated 18-8-1994 the major payment of sale consideration was handed over and the possession was also transferred, therefore, the sale stood completed during the year under consideration. It was observed that the assessee has sold his undivided share of 44/192 in the immovable property bearing C.S. No.1552 situated at Gamdevi to M/s. Floreat Investment Ltd., for an agreed consideration of Rs. 1,85,63,220 in accordance of an agreement dated 18-9-1994. Necessary permission to transfer the property under Section 269UC of Income-tax Act was also obtained from Appropriate Authority on 31-8-1994. The Assessing Officer has also noted the agreed mode of payment received by the assessee as follows : a sum of : Paid Rs. 83,53,449 Rs. 92,81,610 to be paid leaving balance of within 9 months of the Rs. 9,28,161 which date of this agreement or is converted into whichever is earlier. In 15-5-1995 and int.
case any amount of the @ 16 per cent is According to this chart almost the entire sale consideration was paid and the balance remained payable amounted to Rs. 9,28,161. As per one of the clause of the said agreement the entire payment had to be made by 15-5-1995 and if any amount remained payable then there was a clause of charging of interest @ 16 per cent per annum. Hence the Assessing Officer has observed that it was evident that the unpaid balance of Rs. 9,28,161 got converted into debt/loan from 15-5-1995 bearing an interest of 16 per cent per annum. Thus according to him the entire sale consideration has been disbursed by the purchaser.
3. In the assessment order the Assessing Officer has further referred the terms of various clauses of the said agreement and has drawn a conclusion that the object of the agreement was to grant development right over the property and ultimately transfering the property in the name of any nominee of the purchaser such as a Co-operative Housing Society or any association of persons. According to him conveyance of the property into the name of the purchaser was never a prime requisite for the purpose of the sale agreement.
4. Further the Director of M/s. Floreat Investments Ltd., Mr. Jimmy Parikh was also interrogated and his statement was recorded in which he has stated that all the essential clauses of the agreement have been completed except the transfer of the property in their name. According to Assessing Officer under the Income-tax Act the transfer of property by conveyance is not essential if other requirements of transfers were met for taxing capital gains arising out of sale. Rejecting all the explanations offered by the assessee the Assessing Officer has worked out the long term capital gain as follows :As per agreement Rs. 1,85,63,220Less:area Rs. 80,24,000 ---------Long Term Capital Gain Rs. 61,32,615 --------- 5. Being aggrieved, the assessee went in appeal. Before first appellate authority the issue was discussed in detail as well. Ld. Commissioner (Appeals) has reiterated the facts of the case and reproduced the clauses of agreement dated 18-8-1994. He has mentioned that it is seen from the clauses of the agreement that M/s. Floreat Investment Co. have to pay 50 per cent of lump-sum price of Rs. 1,85,63,220 within 3 months of obtaining the no objection certificate from the Appropriate Authority under Chapter XX C of the Income-tax Act, 1961 and balance of 50 per cent has to be payable within 9 month of the agreement dated 29-9-1994. In fact, it is seen that, the appellant has received the following amounts from M/s. Floreat :18-8-1994 537342 ANZ Grindlays Rs. 18,56,322.00 Cr.2-11-1994 896361 -do- Rs. 18,56,322.00 Cr.26-4-1995 896387 -do- Rs. 55,68,966.00 Cr.30-1-1996 118377 -do- Rs. 83,53,449.00 Cr.
---------------------- Leaving only a balance of Rs. 9,28,161. As per Clause 8, the entire risk was to be borne by the purchaser and the purchaser has to indemnify the seller and as per Clause 9 on receipt of the no objection certificate from the Appropriate Authority under Chapter XXC the seller viz. the appellant has to give an irrevocable licence to the purchaser i.e., M/s. Floreat to enter the property, Ld. Commissioner (Appeals) has also reproduced the statement of the Director of M/s. Floreat Mr.
Jimmy Parikh and recorded that he had agreed that all the clauses of the agreement had been completed but only the transfer of the property into their name had to be carried out. This has shown that all the essential ingredients of the said agreement were completed before 30-1-1996 and accordingly M/s. Floreat has paid 90 per cent of the sale leaving a balance of Rs. 9,28,161, he has observed. He has also noticed a fact that out of the sale consideration received, the assessee has also made an investment for construction of residential unit to the extent of Rs. 81,21,550. With all these observations he has held that alone the appellant had received 90 per cent payment and handed over the possession of the property, therefore, the capital gain had been rightly brought to tax during the accounting period relevant for the assessment year 1996-97. Being aggrieved, now the assessee is further in appeal.
6. Ld. Counsel Shri S.E. Dastur along with Shri F.V. Irani and Shri PJ.Pardiwala appeared on behalf of the assessee. First of all our attention was drawn on the agreement dated 18-8-1994 placed in the paper book from pages 1 to 16. He has stressed that number of clauses have imposed certain conditions and restrictions for the finalisation of transactions. Such conditions were as permission from Urban Land Ceiling Regulation Act which was obtained on 25-6-1996. Likewise, Ministry of Environment & Forest has amended the clearance on 7-2-1996.
The Municipal Corporation has sanction the plan by a letter dated 5-9-1996. After pointing the aforesaid dates he has strongly stressed that the owners vide their letter dated 15-1-1997 granted only a limited permission as a licencee to M/s. Floreat with the limited object of demolishing vacant premises and constructing only upto plinth level on the area so demolished. According to him the sale was ultimately completed on 16-3-1999 on which date the appellant executed an irrevocable power of Attorney in favour of Shri Jimmy Parikh, director of M/s Floreat and handed over the possession. Therefore, the assessee has declared a capital gain for the assessment year 1999-2000, copy of computation of capital gain and statement of income filed on pages 165 to 169. The next argument was that in the subsequent assessment year i.e. assessment year 1997-98 the assessee has declared the income from house property being 11/48th share of M/s. Jethabhai Kalyanji (Gamdevi) property. Since the assessee was the owner, therefore, he has declared as per this said return the income from house property. In support of this proposition he has cited a decision of CIT v. Smt. T.P. Sidhwa [1982] 133 ITR 840 : [1981] 10 Taxman 106 (Mad.).
7. The next argument of ld. A.R. was in respect of passing of consideration. He has pointed out that the total consideration agreed was not transferred during the accounting period under consideration and only 90% was paid which is also an undisputed fact. The balance amount was shown as a liability and unless and until the total consideration was not passed the transaction was not complete and the property could not be treated as transfer. Refering page 61 of paper book it was pointed out that a letter dated 16-3-1999 was written by the purchaser addressed to the assessee/vendor refering the payment of the balance amount. This letter, therefore, indicates that the deal was completed only at the end of the financial year 1999, therefore, as per provisions of law the assessee has shown the capital gain for the assessment year 1999-2000. He has emphasised since there was no transfer as on 31-3-1996, therefore, there was no capital gain had to be charged for the assessment year 1996-97. During the course of argument he has also referred the dates of certain permissions such as Municipal permission, approval of plan by B.M.C., commencement certificate, all of them have been granted after the assessment year 1996-97. According to him all such dates thus clearly indicates that the Builder took the control over the property in the subsequent years.
8. Now going to the provisions of the statute, first of all he has explained Section 2(47) of Income-tax Act according to which the expression "transfer" in relation to a capital asset has been defined so as to include the sale, extinguishment of any rights etc. This Section was amended from time to time w.e.f. 1-4-1988. It was inserted that in transaction involving allowing the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred in Section 53A of Transfer of Property Act shall include the transfer of a capital asset. Then he has cited Section 45 of Income-tax Act and mentioned that any profit or gain arisen from the transfer of capital asset effected in the previous year chargeable under the head capital gains and shall be deemed to be the income of the previous year in which the transfer took place. Since deeming provisions are part of the statute, therefore, the capital gain is an artificial income treated by the said relevant provision hence should be strictly construed. In case of doubt the assessee would be entitled to the benefit of doubt. Capital gain is a gain on realisation of money by disposal of an asset in any one of the modes referred to in the definition "transfer" in Section 2(47). Therefore, he has argued that there should be a nexus between the transfer and the resultant gain on realisation of money. The receipt of money is the essential ingredient originated from such transfer. If' the realisation of money retrains incomplete, therefore, resultantly the transfer also remains incomplete. In a case where part of the price was received then the vender continues to be the owner of the property. Reliance was placed on the decision of Gujarat High Court in the case of CWT v. H.H.Maharaja F.P. Gaekwad [1983] 144 ITR 304 : [1982] 10 Taxman 314. He has further cited a decision of Hon'ble Supreme Court in the case of Alapati Venkataramiah v. CIT [1965] 57 ITR 185, wherein it was observed that the title could not pass till the conveyance was executed and registered and as the sale deed was executed and registered afterwards, therefore, no sale or transfer took place on that particular date and no capital gain arose for that relevant previous year. After narrating the precedent it was again argued that the complete possession was handed over sometime in the year 1998 and only part licence was given to the vendor, therefore, such type of permission could not be termed as "transfer". For this proposition he has cited a decision of "C" Bench, Mumbai in the case of Dy. CIT v. Asian Distributors Ltd. [2001] 70 TTJ 88. Strongly relying upon this judgment he has argued that on identical facts the Hon'ble Tribunal has held that since no possession being given, therefore, no transfer of land have been taken place.
9. The next argument was in respect of fair market value to be determined as on 1-4-1981. In this regard copy of the valuation report of D.V.O. dated 30-3-1994 was placed on record. According to him when the D.V.O. had given the valuation report then there was no need to adopt the valuation as declared in Wealth-tax returns. He has also challenged that the ld. Commissioner (Appeals) has wrongly directed to adopt the value as shown by the appellant as per Wealth Tax statement as on 1-4-1981. In support a decision of Mrs. Indira Baib v. ITO [1992] 42 ITD 397 (Mad.) and another decision of Addl CIT v. Smt. Indira Bai [1985] 151 ITR 692 : [1987] 31 Taxman 1 (AP) were cited. Finally he has concluded that the documents and evidences show that the possession of the property was agreed to be given to the Developers only upon payment of the last instalment and mere liance was given to enter upon and carry on development activities, therefore, no transfer took place in the year under consideration. Regarding cost of acquisition since the report of the Departmental valuer is now on record the same can be directed to be adopted in the computation of capital gain.
10. On behalf of the revenue ld. D.R. Shri Karan Singh has strongly relied upon the decision of Assessing Officer and ld. Commissioner (Appeals). In brief, it was argued that the total consideration was passed and the balance amount was an interest bearing loan and the possession was handed over to the developer to undertake the development and construction during the accounting period, therefore, the transfer took place and the capital gain was rightly charged. The statement of the Director of purchaser company has also verified this fact. The buyer has paid the amount of consideration only when all the condition of sale were completed. He has also contended that out of the sale consideration received by the assessee a substantial amount was also invested towards purchase of a new residential unit to claim the deduction under Section 54F of Income-tax Act. The conduct of the assessee as well as of the purchaser thus clearly indicate that there was no doubt in respect of sale of the property, therefore, step by step all the conditions were fulfilled as laid down in the said agreement. In respect of the case laws cited on behalf of the assessee he has argued that the facts and the issue before the Hon'ble Courts were not identical, therefore, cannot be relied upon. He has accepted the proposition of the assessee that the valuation of property as on 1-4-1981 can now be determined on the basis of D.V.O's report. He has concluded that the intention of the legislature has also been expressed by the Board's Circular No. 495 dated 22-9-1987 according to which even in the absence of conveyance deed the transfer took place at the time of giving of possession in terms of the part performance of a contract.
Therefore, he has finally pleaded that the capital gain was rightly taxed for the assessment year 1996-97.
11. We have carefully heard the detailed arguments of Mr. Dastur in the light of the orders of the Revenue Authorities and the evidences placed on record as well as thoroughly perused the cited decisions. We have also considered the arguments of ld. D.R., Mr. Singh. Facts of the case have already been narrated in above paras. The appellant is the owner of a 44/192 undivided interest in the property situated at Gamdevi. By an agreement dated 18-8-1994 entered into between the appellant and Floreat Investments Ltd. (hereafter referred as "Floreat") the appellant agreed to sell his undivided interest in the property subject to the reservation of a certain area and on the terms and conditions mentioned therein. The consideration for the transfer was fixed at Rs. 1,85,63,220. The subject-matter of the sale was the applicant's undivided interest in the property less an area sufficient to get constructed through Floreat a residential unit on the said immoveable property having an area of approximately 5,015 sq. ft. Floreat had agreed to act as an independent contractor and construct a residential unit. Clause 4 of the agreement provided for the manner in which the consideration for the transfer of the property was to be discharged.
Ten per cent (10%) of the total consideration was to be paid as earnest money, a further ten per cent (10%) was to be paid within fifteen days of the receipt of the no objection certificate from the appropriate authority (such no objection certificate being received on 11-11-1994); thirty per cent (30%) of the amount was to be paid on Floreat being given an irrevocable licence to enter upon the applicant's share in the property after all sanctions, provisions and permissions had been obtained or within there months from the date of receipt of the no objection certificate from the appropriate authority whichever period expired earlier and the balance 50 per cent of the consideration was to be paid within a period of nine months from the date of the agreement or on the completion of the sale whichever period expired earlier. It was provided that if the last instalment of 50 per cent was not paid on or before 15-5-1995, Floreat would be liable to pay the applicant interest at the rate of 16 per cent per annum. Clause 8 of the agreement contemplated that various sanctions would have to be obtained from the Maharashtra Housing Area Development Board, the authority constituted under the Urban Land Ceiling & Regulation Act and the Municipal Corporation of Greater Bombay. In order to do so the applicant was to give a power of attorney in favour of Floreat or its nominee to make necessary application. Clause 9 provided that at any time after all the necessary permissions and sanctions have been obtained as provided for in Clause 8 and on receipt of the no objection certificate from the appropriate authority, the appellant was to grant to Floreat an irrevocable licence to enter upon the applicant's share of the said property as a contractor. Clause 11 of the agreement provided that upon Floreat being given an irrevocable licence to enter upon the applicant's share of property and after all necessary approval and permissions had been obtained, Floreat would be entitled to demolish building Nos. 1 to 3 and building No. 10 and any of the other buildings on the property subject to Floreat settling the claims of the various tenants. Clause 20 provided that the sale would be completed by the execution of a conveyance in favour of Floreat or its nominees not later than 15-5-1995.
12. The Competent Authority under the Urban Land Ceiling & Regulation Act granted permission to the owners of the property to hold the vacant land for the purpose of redevelopment after demolishing the existing structure. It further stated that the owner's case for permission under Section 22 would be considered on the new structure being constructed.
The Ministry of Environment & Forest granted the environmental clearance for the project by an order dated 7-2-1996. It is only after the aforesaid approvals were received, did the Municipal Corporation of Greater Bombay sanction the plans by a letter dated 5-9-1996 and thereafter issued an intimation of disapproval on 24-9-1996 wherein they set out the terms and conditions to be complied with prior to permission for commencement of construction upto the plinth level to be granted. The commencement certificate permitting commencement of construction upto plinth level was issued only on 15-11-1996 and the said permission to construct was extended upto the 14th floor only on 31-3-1998. As the obtaining of the aforesaid sanctions took far longer than contemplated, the parties had extended the date for payment of the consideration as set out in the agreement. Ultimately, on 30-1-1996 Floreat paid an amount on Rs. 83,53,449 leaving a sum of Rs. 9,28,161 as still payable.
13. The details of payment have already been given above. According to assessee the sale was completed in the year 1999 on which date the appellant executed an irrevocable power of attorney in favour of Mr.
Jimmy Parikh the Director of M/s. Floreat. Accordingly the appellant had offered the capital gain arising on the sale of his undivided interest in the Gamdevi Property in the year 1999-2000 and paid tax thereon. From the paper book running into 169 pages we have extracted that during the financial year 1995-96 relevant for the assessment year 1996-97 the appellant has received the following permissions in compliance of various terms of the agreement dated 18-8-1994 as under : (i) Environmental Clearance under Coastal Regulation by way of Notification from Government of India, Ministry of Environment and Forest, New Delhi dated 7-2-1996.
(iii) Permission for Redevelopment of Property at Plot A from MHADA dated 25-6-1995.
(iv) U.L.C. Redevelopment Permission under Section 22 of the U.L.C. Act, 1976 dated 26-4-1995.
(v) No objection Certificate under Section 269UL(3) for transfer of Property at the declared consideration dated 11-11-1994.
(vi) Competent Authorities under Urban Land Ceiling & Regulation Act agreed construction vide their order dated 25-6-1995.
(vii) The Ministry of Environment and Forest granted the environmental clearance for the project by their order dated 7-2-1996.
14. From the sanction obtained as referred above it is evident that the intention of both the parties were to complete the project as per the schedule. In this context Clause 8 of the said agreement dated 18-8-1994 is also very relevant on the basis of which the aforesaid sanction have been taken, reproduced below : 8. The Vendor is aware that the Purchaser is purchasing the Vendor's share of the said property for purpose of developing the same under the provisions of the Maharashtra Housing Area Development Act (hereinafter called 'MHADA') in accordance with the applicable rules and regulations. The vendor shall, when called upon by the Purchaser at any time after the execution of this agreement, execute in favour of the Purchaser and/or its nominee(s) a limited power of attorney authorizing the donee(s) thereof to deal and correspond with the Government and all statutory, public and local bodies and authorities and submit proposals and plans for development of the said property as aforesaid and in particular to obtain all necessary permissions and approvals under MHADA and from the Urban Land Ceiling authorities and the Municipal Corporation of Greater Bombay and to make and receive back all deposits and monies from the Government, the Municipality of Greater Bombay and all statutory, public and local bodies and authorities. All and whatsoever the donee(s) of such Power of Attorney shall do or cause to be done shall be at the Purchaser's risk and cost and the Purchaser shall indemnify the Vendor against the consequences of all acts and omissions under such Power of Attorney and costs, charges and expenses on and incidental to the same.
From this clause it is evident that the Vendor was aware about the intention of vendee and, therefore, agreed to execute Power of Attorney or any authorisation in favour of the vendee or any of its nominee.
15. The next Clause 9 as provided has provided that the vendor shall grant to the purchaser or its nominee 'irrevocable licence' to enter upon the share of said property, reproduced below : 9. At any time after the Purchaser shall have obtained all the necessary permissions and authorities as provided in Clause 8 above and upon receipt of the no objection certificate from the Appropriate Authority under, Chapter XXC of the Income-tax Act, 1961, the Vendor shall grant to the Purchaser and/or its nominee(s) an irrevocable licence to enter upon the Vendor's share of the said property including in particular the 37 rooms out of the 160 rooms which constitute the share of the vendor and which include the reserved area, the reserved area being solely for the purpose mentioned in Clause 10 hereof and as contractor for the Vendor.
16. Finally Clause 20 of the said agreement has referred the final execution of conveyance as follows : 20. The sale shall be completed by execution of Conveyance(s) of the said property in favour of the Purchaser and/or its nominee or nominees (including a Co-operative Society or Societies or an Association or Association of Owners) not later than 15-5-1995. Such Conveyance(s) shall be drawn up by the Purchaser's Advocates and approved by the Vendor's Advocates. The Vendor shall obtain their Certificate(s) under Section 230A of the Income-tax Act, 1961 prior to execution of the said Conveyance(s) provided the draft thereof is handed over to the Vendor at least 15 days prior to the date of completion.
17. The purpose of reproducting the Clauses of the agreement were to ascertain the fact that step by step the project was in progress and the clearances were serially obtained as per supra. The payments have also been made and the vendor i.e. the assessee in all respect and never intended to revoke the said agreement. As far as the balance payment remained the nature of the same was rightly mentioned by Revenue Authorities as a loan/debt as is evident from a letter of Floreat dated 30-1-1996 placed on page 34 of paper book. This letter has clearly mentioned that the balance amount was paid along with the amount of interest. In view of this fact no doubt is left that the settled consideration was passed from the Purchaser to the assessee as per the terms of the agreement within the stipulated period.
18. Since all the formalities have been completed, therefore, the assessee has permitted for demolition of the portion of the property which is also evident from the annexed letter. The Floreat was permitted to enter upon the said property for the purpose of demolition and the construction upto the plinth level in terms of the commencement certificate. We have also taken note of a letter dated 28-12-1996 placed on page 49 written by Floreat addressed to the assessee that the construction plans have been sanctioned by B.M.C. in November 1996 according to which demolition as well as construction upto plinth level was granted. In this sequence one more letter dated 23-5-1998 placed on page 56 which has specifically mentioned as follows : We are pleased to inform you that the amended plans have been sanctioned and the commencement certificate has been extended upto the 14th floor although our amended plans provide for 24 floors and even the IOD granted to us is for 18 floors.
Earlier, you had given us a bare permission limited to the extent of demolition of the vacant premise and construction to the extent permitted. As provided in the Agreement for Sale dated 18-8-1994, we request you to allow us to enter upon the property as pure licensees by executing the required licence and authority and thereby, regularise the licence given earlier.
This correspondence thus clearly indicates that the possession had already been given so that the demolition work was to be accomplished and the construction has also taken place to the certain extent permitted. The further request was not even in respect of the possession over the property but to regularise licence given earlier.
Through subsequent para of this letter which is produced by us, it was asked to furnish an irrevocable power of attorney resulting into completion of the matter. During the course of argument ld. A.R. has also drawn our attention on a letter dated 14-12-1998 written by Advocates and Solicitors of the assessee to the Advocates & Solicitors of the purchaser Floreat Investment indicating that the assessee got ready to complete the sale and to put the purchaser in possession of the property. Though this letter has mentioned to put into possession the purchaser but the same appears to be not very convincing because by the date of writing of this letter number of other activities had already been taken place and the construction upto plinth level was also accomplished after the demolition of the portion of the property.
Convincingly it can be presumed that through this letter the seller further wanted to strengthen the title of the purchaser by execution of an irrevocable power of attorney along with transfer of complete rights. The fact of the possession over the property of Floreat can also be established by a letter dated 18-2-1999 written to the Attorney of Co-owners of the property in connection of reimbursement of well water charges recovered from the Floreat from the period 1-4-1997 to 31-1-1999. From the dates of the period it is evident that from very next day i.e. 1-4-1997 from the end of the financial year under consideration ie. 31-3-1996 the builder was using the well water and paid relevant charges to the owners, i.e., the assessees. Naturally the water must have been used towards the development of the property by the developer. Considering all the above referred facts, circumstances and evidences in our opinion the property in question was under the control and possession of the purchaser/builder i.e. M/s. Floreat Investment as on 31-3-1996.
19. After considering the facts of the case let us examine the legislative intention in respect of Section 2(47) in which Sub-clause (v) has been inserted by the Finance Act, 1987 w.e.f 1-4-1988. The purpose of the insertion was to neutralise certain devices and transactions pursuant to which capital assets or interest therein were transferred in such a manner so as to fall beyond the parameters of the definition of the term "transfer" in Section 2(47). The intention of legislature which has been expressed in the Board's Circular No. 495 dated 22-9-1987 confirms this objective as can be seen from para Nos.
11.1 and 11.2, reproduced below : 11.1 The existing definition of the word "transfer" in Section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member of or acquiring shares in a co-operative society, company, or association of persons or by way of any agreement or any arrangement whereby such person acquires any right in any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and area common made of acquiring flats particularly in multistoreyed constructions in big cities. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in Section 53A of the Transfer of Property Act, 1882. New Sub-clauses (v) and (vi) have been inserted in Section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above.
This Sub-clause thus provides that allowing possession of any immovable property in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 would amount to "transfer". From the review of Section 53A of T.P. Act it appears that if possession of immovable property is given pursuant to an agreement for sale it is covered by Section 53A, such possession itself would fall within the definition "transfer" notwithstanding the fact that there is no conveyance. At this juncture we would like to mention that such amendments and changes have neutralised the ratio of the Supreme Court laid down in the decision of Alapati Venkataramiah's case (supra), as referred by ld. A.R. The Hon'ble Supreme Court in the aforesaid decision has followed an earlier decision in the case of CIT v. Bhurangya Coal Co. [1958] 34 ITR 802. In terms of these decisions, transfer of immovable property was considered to have taken place upon conveyancing and not on the date of the agreement for sale. Now, a question would arise as to whether the insertion of Sub-clause (v) would mean that the transfer of the same immovable property in terms of Section 2(47) would take place once at the time of giving of possession, in terms of the newly inserted Sub-clause (v) and once again also when the conveyance is completed, in terms of the above mentioned Supreme Court decision The answer to this question appears to be obvious, viz., that if in terms of Sub-clause (v), transfer is construed to have taken place at the first stage of giving possession of immovable property, there cannot be a second transfer of the same property at the time of execution of conveyance. Therefore, the offer of capital gain by the assessee for the assessment year 1999-2000 was not in accordance with the provisions of Income-tax Act. Though it is not important to comment but still the assessee is at liberty to take suitable action if deem fit for necessary amendment or rectification as per law.
20. Finally on behalf of the assessee an order of the Tribunal in the case of Asian Distributors Ltd. (supra) was also cited, however, we have found that the facts being not identical cannot be relied upon. In this cited decision a finding was recorded that the possession of the property was agreed to be given to the developers only upon payment of the last instalment and till such time the assessee had a right to revoke the contract in certain eventualities. On the basis of these findings it was held since last instalment had fallen due in the subsequent financial year then the assessment year under consideration, therefore, it was held that no transfer took place and no capital gain was held taxable in that impugned assessment year. On the contrary in the present appeal before us admittedly on the basis of various evidences and in terms of the agreement we have already given a finding that the necessary condition for "transfer" were fulfilled, therefore, the revenue authorities were justifiable to assess the capital gain for the assessment year under consideration. We have also perused the other decisions and found them distinguishable on facts and law.
21. On the basis of the factual position, the view expressed by us in the above paras also gets support from certain judicial pronouncements.
In the case of D. Kasturi v. CIT [2001] 251 ITR 532 (Mad.) it was held that the ingredients of Section 53 A of T.P. Act were satisfied when the assessee had given the possession of the property after receipt of the full consideration. The subsequent execution of sale deeds did not militate against the operation of Section 53A of T.P. Act. After the assessee parted with possession of the property, such possession have not been given only after payment of the agreed consideration for the sale, she could no longer assert possessory rights against such person to which possession was given.
Likewise in the case of Smt. Lalitha Ramaswamy v. ITO [2001] 70 TTJ 176, ITAT Mumbai Bench has observed that the bungalow was demolished in the year under consideration, therefore, the demolition could be on behalf of the vendees and not vendor. It was held, totality of facts and circumstances shows that the assessee had handed over the effective possession of the bungalow to the vendees. Since the conveyance was in respect of the land and bungalow, the act of demolition of the bungalow cannot be on behalf of the vendees, it was observed by ITAT. The fact of demolition of the bungalow in the previous year strongly supports the claim of the revenue that the assessee had handed over the effective possession of the scheduled property to the vendees.
Further on the same proposition the decision of ITAT Calcutta Bench in the case of ICI India Ltd. v. Dy. CIT [2002] 80 ITD 58 is also worth mentioning. Thus it can be concluded that factually as well as legally the Assessing Officer has rightly assessed capital gain in the year under consideration, hence the grounds raised in this regard have no force.
22. In view of aforementioned discussions grounds from 1 to 6 as per grounds of appeal are hereby rejected. The next ground i.e. Ground No.7 is in respect of the determination of fair market value of certain immovable properties. In this regard on perusal of the order of ld.Commissioner (Appeals) we have found that the Assessing Officer was directed to adopt the value as on 1-4-1981 as determined in Wealth Tax proceedings. However, as per the assessment order the Assessing Officer has specifically mentioned that the valuation had been referred to Valuation Cell of Income-tax Department to value such properties as on 1-4-1981 but till the date of assessment the valuation report was not received. Under such circumstances the Assessing Officer has mentioned that the valuation as per the D.V.O's report would be substituted subsequently by an order under Section 154. Now before us copies of such valuation reports were filed. After hearing the submissions of both the sides and considering the material evidence placed before us we are of the view that the value of all such properties as on 1-4-1981 should be taken as per the report of the Departmental Valuer. The Assessing Officer is directed to recompute the capital gain accordingly. Hence Ground No. 7 is allowed.
23. Through last Ground No. 8 the appellant has challenged the levy of interest under Sections 234B & 234C. In our opinion now in view of the order of Hon'ble Supreme Court in the case of CIT v. Anjum M.H.Ghaswala [2001] 252 ITR 1, the issue is settled in favour of the revenue because it was held that the charging of interest in mandatory in nature. Thus this ground of the appellant is rejected.
24. In the result, the appeal of the assessee is partly allowed as directed above.